One ASX 200 stock could be destined to pay incredible dividends in the coming years.
That's what analysts at Goldman Sachs are saying, predicting a dividend yield of 22% in FY 2027.
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Which ASX 200 dividend stock?
The stock in question is coal miner Coronado Global Resources Inc (ASX: CRN), which has just released its half year results.
Goldman Sachs was pleased with the results and notes that its free cash flow (FCF) is at an inflection point, which bodes well for future shareholder returns.
This is being underpinned by an operational turnaround. It commented:
With the catch-up in waste stripping complete at Curragh and the reinvestment at Buchanan over 75% complete, we think CRN is set for an operational turnaround over the next 18 months (starting in mid 2024), post a multi year period of operational underperformance. That said, operational improvement in 2H is key, to establish operational credibility and re-rate the stock in our view. We forecast a ~10% lift in saleable coal production to ~18.5Mt over the next 2yrs.
In addition, the broker believes that the metallurgical coal market is heading into a deficit in the coming years, which should be supportive of higher prices (and profits). It adds:
Our analysis indicates the met coal market will be broadly balanced from 2024-2026 with increasing India demand being offset by a modest recovery in Australian supply. However, near term we see supportive PLV pricing (GSe 3Q24 US$300/t) as AAL and BHP face production challenges in Australia, (highlighted by the recent incident at the 3.5Mtpa PLV HCC Grosvenor mine) with a broader market deficit emerging from 2027 driven by underinvestment in new premium met coal supply in Australia and Canada.
Big dividends
Goldman expects this to allow the ASX 200 dividend stock to pay the following dividends:
- 9 US cents per share in FY 2025
- 10 US cents per share in FY 2026
- 19 US cents per share in FY 2027
Based on current exchange rates and its latest share price of $1.29, this equates to 10.6%, 11.8%, and 22.3% dividend yields, respectively.
And with a buy rating and price target of $1.80 on its shares, Goldman sees potential upside of approximately 40% for investors over the next 12 months. This brings the total potential 12-month return to ~50%.
Overall, the broker appears to believe this could make the ASX 200 dividend stock a good option if you are not averse to investing in the mining sector.
